‘Is it feasible to upsize, rather than downsize, to get a bigger pension?’

Q: Is it feasible to upsize, rather than downsize – so take money out of super so I’m below the asset test threshold, then buy a larger property and receive a larger pension?

A: Provided you have reached your preservation age and have satisfied a condition of release, you can withdraw money from your superannuation tax-free without limit. But when you consider that the costs of moving could be well over $100,000, and you would be losing earnings on the money you have in superannuation, it may not be a wise choice. Make sure you take advice and do all the sums before committing yourself.

Q: I’m a 65-year-old homeowner who’s retiring in six months’ time. I have $153,000 in super. Would it be better to use one of the home equity release products available now to top my super up to $220,000 and receive a higher income from super when I retire, or own my home outright without the $70,000 debt this would incur?

A: Every home equity release product has a cost, and I can’t see the point of effectively borrowing $70,000 to boost your superannuation. Based on the information you have provided you should receive a full Age Pension, on which you should do reasonably well if you have a debt-free home.

Q: We’re a couple aged 60 and 67, with $800,000 in super and two rental properties with a combined outstanding mortgage of $350,000. Our own home is worth $800,000. Would we be wise to downsize our home and pay off the mortgages on the rental properties or sell the rental properties?

A: Downsizing would cost you a fair chunk of money. If the rental properties have good potential, and the rentals are easily covering the interest on the loan, it would make sense to hold them in the hope they will increase in value. You should live well in retirement with $800,000 in super so I see no rush to get rid of quality assets.

If you’ve got questions about retirement income or about downsizing in retirement, don’t miss our FREE, online masterclass at 1.00pm AEST on September 22 with veteran finance guru Noel Whittaker, downsizing expert and author Rachel Lane and Kate Melrose, an expert on land-lease communities at Ingenia Lifestyle. Click here to register to attend.